Gold Reserve Act of 1934
The gold standard is a monetary standard that ties a unit of currency, or money, to a stated amount of gold. Under this system, both banks and the government stand ready to redeem their note and deposit liabilities in gold at the stipulated rate. In September 1931 the United Kingdom abandoned the gold standard, and many countries followed. The United States held on to the gold standard until 1933, when both foreign and domestic demand for gold led to runs on U.S. banks (with depositors and note-holders rushing to cash in their assets for gold). The fear was that a large number of banks would fail due to insufficient gold to cover demand, and that the U.S. official gold stock would be depleted. This economic danger occurred just as President Herbert Hoover’s term was ending and Franklin Delano Roosevelt’s had not yet begun. Moreover, there was no cooperation between the president and president-elect. Rumors were spreading that the new president might terminate U.S. adherence to the gold standard.